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Europe Central Bank ECB President Mario Draghi on Wednesday mentioned that the nature of all actions is temporary. In addition, financial support can not substitute for investment or prudent policy to finance infrastructure. These are needed for sustainable growth and economic stability of Europe.
Draghi once advised that European banks and governments have a greater role in overcoming the financial crisis and responsibility to restore calm.
The housing crisis in Spain had crippled the country’s banks. The country’s largest bank Santander’s net profit in first quarter fell 24 percent this year.
With the increasing number of unemployed in France which in March climbed to the highest in 13 years, the willingness of consumers to spend fell sharply.
Indebted euro zone member states are struggling on one hand to control the deficit and limit their liabilities. However the stringent economic programs on the other hand run the danger of affecting the employment market and economic growth due to the contractionary nature.
As Ben Bernanke, US Federal Reserve chairman had already mentioned, the Fed needs to boost economic growth and will continue on existing policies. Bank policymakers at their meeting on Wednesday agreed to continue to keep interest rates low until late 2014. This is believe to be needed to reduce the unemployment rate, promote rapid economic growth and increase in consumption and domestic production. Having said so the GDP growth in America fell from three percent in the final quarter of last year to 2.5 percent in the first quarter of this year and this decline suggests economic growth is slowing. It is feared that the trend of dropping unemployment rate in America will be reversed. As it is six months before the presidential election, issues such as economic growth and reducing unemployment are the main campaign topics of Mitt Romney and Barack Obama.
Although American consumers in the first quarter this year were more willing to spend, America’s economic growth rate was slower.
Japan’s central bank on Friday announced a $124 billion of government debt in the form of government bonds. The Bank of Japan is trying to conduct expansionary policies and economic incentives to help expedite the recovery process and ultimately economic growth. This is the second facilitation by the Bank of Japan in the past two months.
From a technical perspective: The EUR/USD is in a form of confusion and uncertainty. If you look at the daily time frame, the currency pair is trapped inside a triangle. A kind of balance between buyers and sellers. If you look at the 4-hour time frame, EUR/USD is located within a bullish channel. While the currency remains in the triangle, we cannot be sure of the trend.
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